Just because your tax case drags on doesn’t mean you get out of paying interest. If you want relief under §6404(e), you need to show the IRS actually messed up on some routine paperwork or admin—not just that the process took a while.
Holding
The Tax Court sided with the IRS. No, they didn’t abuse their discretion by refusing to wipe out $1,649 of interest on Andrew Tabaka’s 2016 tax bill. The IRS moved the case along at a normal pace, and the stuff Tabaka complained about was all about figuring out his actual tax—not some clerical slip-up.
Why It Matters
The decision applies a narrow statutory standard. Section 6404(e) does not authorize interest abatement whenever an IRS examination, Appeals proceeding, or Tax Court case takes longer than the taxpayer believes necessary. The taxpayer must connect the interest to an unreasonable IRS error or delay involving a qualifying ministerial or managerial act.
Normal litigation time generally does not qualify. The Court treated the approximately 16 months between the IRS’s first written contact and entry of the stipulated Tax Court decision as routine, particularly because the case moved through examination, Appeals, IRS counsel, and settlement.
Disputes over substantive tax liability fall outside §6404(e). Determining whether reported Forms 1099-R correctly reflected taxable retirement distributions required legal and factual judgment. Those decisions were not ministerial or managerial acts.
The decision also illustrates an important jurisdictional rule. When the IRS does not issue a formal final determination on an interest-abatement claim, §6404(h)(1)(A)(ii) allows an eligible taxpayer to petition the Tax Court after 180 days have passed from filing the claim. The absence of a formal denial, therefore, does not leave the taxpayer without judicial review.
Key Facts
Andrew Tabaka and his wife filed their 2016 federal income tax return in March 2017.
The IRS identified $93,200 of retirement income reported by third parties on two Forms 1099-R but not reported on the return. On April 16, 2018, the IRS issued a CP2000 proposing:
A $23,960 income tax deficiency.
A $4,792 accuracy-related penalty.
The IRS did not receive an adequate response and issued a notice of deficiency on July 9, 2018.
Tabaka petitioned the Tax Court on October 10, 2018. He also paid $10,590 toward the disputed 2016 liability that day.
The case went to the IRS Independent Office of Appeals in December 2018. Appeals scheduled a conference for January 2019 and warned Tabaka that interest would continue accruing until the liability was paid.
Appeals could not resolve the dispute and returned the docketed case to IRS counsel in April 2019 for trial preparation.
The Tax Court scheduled a trial on June 5, 2019. Tabaka made an additional payment of $7,848 on July 3, bringing his total payments to $18,438.
The parties then settled. They stipulated that:
Tabaka owed an $18,438 deficiency for 2016.
No accuracy-related penalty applied.
Interest would be assessed as provided by law.
The Tax Court entered the stipulated decision on August 6, 2019.
The IRS initially calculated interest of $2,246 without properly accounting for Tabaka’s earlier payments. After recognizing the payments, the IRS abated $614 of interest and made minor account adjustments. The remaining interest liability was $1,649, which Tabaka paid in December 2019.
Fast forward to June 2020. Tabaka files Form 843, asking for his $1,649 back. His pitch? The IRS dragged its feet and turned a simple tax issue into a marathon.
The IRS never bothered to send a formal denial. So Tabaka took his shot in Tax Court in October 2024.
Statutory and Regulatory Framework
Interest on an income tax deficiency generally begins accruing on the original due date of the return and continues until the liability is paid. Interest compounds daily. §§6151(a), 6601(a), and 6622(a).
Section 6404(e)(1) permits the IRS to abate interest attributable to an unreasonable error or delay by an IRS officer or employee in performing a ministerial or managerial act.
A ministerial act is a procedural or mechanical task that requires no judgment or discretion after all prerequisites have been completed. Treas. Reg. §301.6404-2(b)(2).
A managerial act involves administrative matters such as personnel management or the temporary or permanent loss of records. Treas. Reg. §301.6404-2(b)(1).
A decision involving the proper application of federal tax law is neither ministerial nor managerial.
An error or delay counts under §6404(e) only when:
No significant part of the error or delay is attributable to the taxpayer.
The error or delay occurs after the IRS first contacts the taxpayer in writing regarding the deficiency.
Under §6404(h)(1), the Tax Court reviews the IRS’s refusal to abate interest for abuse of discretion. The Court may order an abatement if the IRS relied on an erroneous interpretation of law or a clearly erroneous assessment of the evidence.
Arguments
Taxpayer argued:
The IRS dragged things out way too long for what Tabaka saw as a simple 2016 tax issue.
The period between the 2017 return due date and the November 2019 interest notice was marked by multiple IRS errors and delays.
The IRS unnecessarily prolonged the case by moving it through Appeals and later referring it to IRS counsel for trial preparation.
The resulting $1,649 of interest should therefore be refunded under §6404(e).
Government argued:
Interest accrued automatically because Tabaka had not paid the full 2016 tax liability by the return due date.
The IRS handled the examination and subsequent Tax Court proceeding within a reasonable period.
Referral of the docketed case to Appeals and then back to IRS counsel followed normal procedures.
Any time spent resolving the correct tax treatment of the Forms 1099-R involved substantive tax determinations rather than ministerial or managerial acts.
The IRS therefore had no statutory basis to abate the remaining interest.
Court’s Reasoning
The relevant period began with the IRS’s first written contact. Section 6404(e) does not treat delays occurring before the IRS contacts the taxpayer in writing about the deficiency as grounds for abatement. The relevant starting date was therefore April 16, 2018, when the IRS issued the CP2000.
The IRS moved the case forward without unreasonable inactivity. The IRS issued the notice of deficiency less than three months after the CP2000. Tabaka petitioned the Tax Court 93 days later. Appeals then received the docketed case, scheduled a conference, and attempted settlement.
Returning the case to IRS counsel was not an improper delay. Appeals could not reach an agreement with Tabaka. Because the case was already pending in Tax Court, Appeals had to return it to IRS counsel for trial preparation. The Court rejected Tabaka’s characterization of that referral as unnecessary.
The underlying dispute was resolved relatively quickly. The Tax Court scheduled a trial in June 2019, and the parties reached a settlement shortly afterward. The stipulated decision was entered on August 6, 2019. Less than 16 months elapsed between the first written contact from the IRS and the resolution of the deficiency proceeding.
Elapsed time alone did not establish statutory delay. Citing Lee v. Commissioner, the Court emphasized that the ordinary passage of time during tax litigation does not by itself constitute an error or delay under §6404(e). The Court characterized Tabaka’s case as having been resolved comparatively quickly.
The challenged activity involved substantive tax determinations. The IRS had to determine the proper treatment of two Forms 1099-R reporting fully taxable retirement distributions. Resolving that issue required evaluating documentation and determining the taxpayer’s correct liability. Those functions required judgment and therefore were not ministerial or managerial acts.
The IRS corrected the actual interest-computation error. The IRS initially failed to account for Tabaka’s prior payments when calculating interest. Once it identified that problem, it abated $614. Tabaka did not dispute the mathematical correctness of the remaining $1,649.
Jurisdiction
The IRS never sent Tabaka a formal final determination denying his Form 843 claim.
That didn’t block the Tax Court from hearing the case.
Section 6404(h)(1)(A) provides two routes to Tax Court review. If the IRS issues a final determination, the taxpayer generally must petition within 180 days after the IRS mails it. If the IRS fails to issue a determination within 180 days after the taxpayer files an abatement claim, §6404(h)(1)(A)(ii) permits the taxpayer to petition after that waiting period.
Tabaka filed his Form 843 on June 5, 2020, and did not petition until October 19, 2024. Because the IRS had never issued a formal final determination, he had satisfied the statutory waiting period.
The Court also noted that jurisdiction would exist even if the IRS’s July 9, 2024, letter were treated as a final determination because Tabaka filed his petition within 180 days of that letter.
This technicality didn’t change the outcome, but it’s a handy tip for anyone else stuck waiting on an IRS answer.
Result
Bottom line: the Tax Court sided with the IRS. Tabaka’s $1,649 interest bill stands.
The Takeaway
This case reinforces that §6404(e) addresses specific administrative failures, not just slow cases. If you want interest abated, you need to point to a specific clerical or management screw-up that actually cost you money. Routine audits, Appeals, and Court fights won’t cut it.